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Author Topic: Why some of us are more interested in Automated Trading?  (Read 12086 times)

Offline iMusingKiMi

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Re: Why some of us are more interested in Automated Trading?
« Reply #75 on: September 10, 2019, 08:40:11 AM »
Yes, the upside is that it will always follow rules, never trade emotionally and never miss entries given enough available margin, whereas the downside is that an algorithm is simply not as adaptive as a human being in spotting different kinds of opportunities and taking into account a huge variety of background information.

Theoretically one could think of a super-algo that incorporates all that, but that would be extremely difficult to program, if only because you have to think of a nearly infinite amount of factors and combine them all in a way that makes sense. Of course machine learning may be the way forward here, but it will have to incorporate weighing different factors differently in different circumstances, extrapolating information from the past into the future. Just using a portfolio of simpler algos suitable for different circumstances and selecting for those would be far easier than to create one 'human-like' algorithm.

I do agree on your explanation. Most algos out there are actually a set of simpler rules instead of 'human-like' algorithm. For instance like cross-market trading or spot-futures arbitrage which exist over the decades that still profitable, just not as profitable as before. With the existence of such algo out there, some people tend to believe 'human-like' algo can be created, beat the market and predict the future with its market movement. If human himself can't predict the future, how are they going to set those kind of rules? Algorithm is a set of rules to be followed in calculations or problem-solving, not to predict future.

 

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